Inquiry recommends Crown Resorts be denied Sydney casino licence

The NSW Independent Liquor and Gaming Authority (ILGA) has recommended Crown Resorts be denied a Sydney casino licence. 

The ILGA tabled its report to the state parliament on Tuesday 9 February. 

Revelations of illegal money laundering within its Melbourne and Perth have seriously hurt Crown Resorts throughout the ILGA’s investigation and placed a major question mark over the $2.2 billion Barangaroo project.

The investigation followed media reports in 2019 that alleged Crown Resorts facilitated money laundering activities through Asian high-roller junkets.

Crown is expected to make an announcement with regards to the decision shortly, however it has already placed its shares into a trading halt in preparation for a potential investor backlash.

NSW Customer Service Minister Victor Dominello will table the ILGA report after question time.

“At the heart of the report is a relationship between organised crime, money laundering and gambling. And more importantly what steps we can do to protect the community against these sinister elements,” Mr Dominello said.

Much of the investigation focused on Suncity – Macau’s biggest junket operator. 

Suncity used a room at the Melbourne venue exclusively from which leaked footage shows large amounts of cash being exchanged for gambling chips.

While Crown executives refuted accusations of “turning a blind eye”, and chair Helen Coonan “unreservedly apologised” for “governance and risk management failings” at the company’s annual general meeting in October, during closing statements Crown counsel Robert Craig launched an unexpected grenade.

Mr Craig revealed that a form of money laundering known as “cuckoo smurfing”, where large transactions are split into small transactions in a bid to disguise them, could be seen in the accounts of two Crown subsidiaries.

The last minute revelation infuriated Commissioner Patricia Bergin.

“There was no notice of any of this,” Ms Bergin said. “It just seems to me to be rather unsatisfactory.

“This material should have been produced last year or at the beginning in February when the material was summonsed.” 

Crown argued in closing submissions that its failings had been rectified.

Packer under fire

The inquiry was also prompted by James Packer’s alleged behaviour.

The billionaire is alleged to have received special treatment, which saw him privy to privileged information through a controlling shareholder protocol agreement.

Mr Packer holds 36 per cent of the company, but quit the board in 2018. The inquiry heard Mr Packer was not suitable to be associated with Barangaroo venue, because although he left the Board he acted as a “de facto director”. 

Crown’s lead lawyer Neil Young claimed the relationship is now “stock standard”.

However, Counsel assisting recommended Mr Packer’s influence be quelled further, recommending that he not exercise more than 10 per cent of his voting power, and that his private company CPH only have one nominee director sit on Crown’s board instead of three.

Crown has stated it will no longer share confidential financial information with CPH and Mr Packer.

The inquiry also investigated Mr Packer’s attempted sale of  his 19.9 per cent shareholding in Crown to Macau to gaming magnate Lawrence Ho’s Melco Resorts.

Half the sale was completed, when it was discovered Dr Stanley Ho (Lawrenec Ho’s father) was forbidden from taking an interest in Crown under its restricted gaming licence in NSW. Mr Ho senior held an interest in Melco through a complex trust arrangement.

Melco sold its interest in Crown to private equity group Blackstone.

It is recommended Mr Packer should have nothing to do with the Barangaroo venue, due to this behaviour and him being a driving force behind the company’s push to secure more of the junket market.

Ms Bergin’s findings, including the recommendation to deny the licence, could influence the approach of other regulators in their own examination of Crown.

Jonathan Jackson, 9^th February 2021